The Red C opinion poll

We are into political economy territory bigtime now, and I don’t think economists can ignore the constraints that this may impose going forward.

So it would be wrong not to have a thread on the latest opinion poll, which shows Sinn Féin leap-frogging Fianna Fáil into third place. Pretty predictable really. Presumably the boffins from Brussels and Frankfurt have factored this sort of thing into their calculations?

Never thought id see the day when FF came fourth in any poll. Spoke to a few middle and senior FFers last night ; they are mostly aghast that they didnt go to the country in late summer, and that they didnt go when the GP ran. Now, they face going to the country after a harsh budget and possibly when the january paycheques are looked at.

I believe i suggested that a high EFSF rate would give the Shinners 25 seats only a week and a half ago! Politicalreform.ie (granted, a lefty supporter, so somewhat talking his own book) is predicting SF on 24 now.

It is supremely ironic that, at this crucial point inthe nation’s history, the ‘left’, in all its variegated glory, is expereincing a resurgence. In some respects it is only a belated maturing of the alignment of the political factions. Its core support is probably something similar to that enjoyed by left-of-centre parties in most other EU member-states, but its overall support is being fuelled by a false perception that the free market, liberal democracy model has failed and that some form of state capitalism is the way to go.

It is based on a profound intellectual error. Capitalism is a behavioural construct among humans that is akin to, and is driven by the same forces and impulses that characterise those governing all living organisms on this planet – evolution. Capitalism is inherently unstable, is capable of causing enormous destruction and constantly mutates. But it is also capable of generating prosperity and the expansion of opportunity.

For centuries liberals and social democrats (as opposed to communists who sought to supplant it) have sought to shackle the beast – to encourage and incentivise it to generate economically and socially useful outcomes and to restrain its ability to cause damage. It is a never-ending struggle – and it has been an unequal battle since the initial bonfire of banking supervision and financial regulation that began in the US in 1998 and spread throughout the developed economies. Ireland, via the IFSC and the banking-policy-developer nexus, and in its own inimitable fashion, ventured towards the wilder fringes of this lunacy.

What we are seeing now are efforts by responsible governments in the major economies to get the genie back into the bottle. But the beast has been unshackled for so long, and has infected political governance to such an extent, that it will be a long battle – and ordinary citizens everywhere are being punished. But the underlying problem is rooted in serious deficiencies in political governance.

In most EU member-states the ‘left’ is a busted flush. Most governments consists of moderate, right or centre combinations. Even left-of centre governments in Spain and Greece are being compelled to govern in this manner. Shackling the beast is now the priority – and Chancellor Merkel has layed down an importnat marker on burden-sharing. Much more progress along these lines is required.

It would be stupid – and self-defeating – in the extreme for Ireland to do anything politically to prejudice the process of institutional reform that is underway in the EU.

I expect FF to undergo radical internal reform after the next election. There will also be a major clean-out of the parliamentary party.

FF committed an error of competence and hubris. They thought they were using the developers for campaign funds and keeping employment high which all led to votes, but the bankers were using them both. They also thought they and their civil servants were smarter than they were. They believed their own publicity.

However, the principles which attract many to FF are still there. National solidarity, social justice, nationalism and commitment to equal opportunity, a commitment to community and a commitment to the welfare of the less well off are still core principles for the party and a lot of its supporters. FF made a major blunder which has had severe consequences but they have done a lot right since disaster struck.

FF’s determination to improve infrastructure and community facilities means that even if the bubble was a disaster we are not left empty handed. There has also been a welcome equalisation of society over the last number of years. FF are not responsible for all our woes as we would have been in a difficult position anyway but FF did make serious errors and deserve a strong dose of medecine.

With that said, if the FF party is properly reformed and is frank about the problems which beset it then I think that it can recover to make a valuable contribution to the debate. In particular, I expect a new generation with new ideas to take the tiller. If there isn’t reform or the old-guard hangs in, then I expect FF to wither.

@Carolus – do you know if PP are giving odds on the Greens getting zero seats? I fancy a bet on that if the odds are good.

On a more serious note – I can see polarisation happening and some independents holding sway again. It’s hard to see FG/Lab coalition with neither likely to want to give way on who becomes the next Teashop.

Hello Jackie – how would you like a new bypass and some swimming pools?

Labour believes that the proposal to make budget adjustments totalling €6 billion in 2011 represents an unacceptable risk to the Irish economy. While the present deficit is unsustainable, the level of frontloading in the adjustment risks causing substantial damage to the fabric of the economy.
…
Labour is proposing an approach to the budget based on balanced consolidation and strategic investment. We propose budget adjustments totalling approximately €5.0 billion, and the establishment of a Jobs Fund of €500m, providing for a net adjustment of €4.5 billion.

A comment I wrote elsewhere, but which is probably just as relevant to this thread:

Nobody has a clue yet what the GE will throw up and who,or what may emerge on the ‘right’ to hoover up some of that FF vote that will be searching for a home and that doesn’t want a ‘left’ party in government. On the polls thus far, FF will be reduced to half its existing representation at the very least. On the basis of this Red C poll, FF look like they’re heading towards 10% of the national first preference vote. This won’t wipe them out entirely as a political force due to other factors like local candidate loyalty, on the ground organisation etc., but might leave them with 25-30 maximum possible seats.

The numbers should be there for Labour and FG to get 100 plus seats between them guaranteeing a massive Dail majority for their coalition. But will people really want any new government with that level of majority? How will such a prospect play in the minds of a deeply angry electorate, dissilussioned with ALL the establishment parties in the run up to the election?

I just can’t see FG ever getting into bed with Gerry Adams, even if both parties could, between them, form a small majority government when the new Dail meets in March/April. In policy terms, there’s just too much distance and anyway, the mere prospect of such a political alliance would be anathema to traditional FG voters and most existing FG TDs and public representatives. FG will be asked time and again to rule out an FG/SF coalition throughout the campaign. If they don’t, then it will cost FG dearly at the ballot box.

Between independents or perhaps, a revival of Libertas under some other name that may scrape a few seats, it’s possible that FG might end up with enough Dail support to form a minority government, especially if they did a Tallaght type deal on the economy with a rump FF for a couple of years.

I don’t believe Labour’s ‘we won’t be bound by this document’ rhetoric on the IMF/EU loans memorandum as the individuals concerned would dig up their grannies’ remains and sell them at the cemetary gates to get into power. With anyone. Labour and SF are on the same ideological path in respect of the IMF/EU deal, as are the other left parties and Independents who will likely be returned to the Dail. I don’t think the broad left will have enough in combination to form an outright majority administration and neither FG nor what remains of FF would be inclined to let them take the prize of government that easily.

But this is all pure speculation – the only real certainty at present is the volatility of the electorate.

@ Richard Tol,

Do you have any calculations on the costs to the economy of the Greens’ proposed climate bill? How would such a policy initiative square with the MoU? The Bill is due to be published in two weeks time apparently. Unless the Dail sits until the end of March, it’s hard to see how it would get beyond a second reading, unless debate is guillotined all the way. Also, I would have thought there’d be some uncertainty on the FF side about supporting such a bill at this stage. The opposition can oppose it by saying they’ll introduce a better proposal when they get in etc. Personally, I’d be amazed if the Greens got another piece of their agenda legislation through the Dail in the time that’s left, but I’m probably wrong.

@zhou
FF made the same mistake that we private shareholders in anglo Irish Bank made.
We hung on, hoping for an upturn, right to the very end.

FF never saw the IMF coming as quickly as they did.
They believed their own fully funded till July 2011 mantra.
They didn’t see the ECB telling them that 130 billion into the Irish banking system was coming to an end. Now they are the party that had to call in the IMF – they can’t say that it would never have happened under them.
On top of that, the deal they have made is totally unsustainable and wont last 12 months, but then that is unlikely to worry FF.

This might be the biggest political change since 1916-1922, but economically this is proably the greatest internal change since the famine. The devastation of at least one generation of wealth will have a paralysing effect for decades. The famine greatest effect was that we went from an ealy marriage to a late marriage society for over 120 years. We have already reverted to a late marrriage society for economic reasons in the last 20 years, but the scale of the catastrophe will maybe end our property mania.

On a political level, FF will offer FG a fantastic deal after the February 2011 GE, so you might be well advised to run for FF on a Bertie was Better slogan. He might even have a spare US$45,000 to fund your campaign. You could easily be a minister on day one.

This opinion poll is being over interpreted. The FF business model consisted of boosting the economy & doling out the proceeds to the PS workforce, the Battlers in Society and the property owning classes.

With the model crashing and burning, the survivors are looking for somewhere else to go. The PS workers & the Battlers have departed to Labour but the polls indicate that they are not certain to remain there. The working class, Republican core that buttressed many a FF TD looks to have gone to SF. This is primarily a clientalist vote. These voters would also be disgusted at the international intervention, especially the bi lateral loan from Baron Osborne of Tipp.

What is really interesting now is that the Labour vote may be fragmenting and that party may be losing support to the micro left. I would expect EG to adopt a more strident left wing/Geen flag waving tone from now on to counter this.

It is hard to know what FF (or rather the MoF and the NTMA) were thinking when they withdrew from the bond market. They must have known there was a big risk it would put a strain on the banks. I think Lenihan’s “Ireland is an Island” comment (if true) is an admission of this. Who bounced who into what is a big question.

Did the MoF decide that he needed the IMF in situ to get the budget through? It is hard to know.

I can’t see FG coming down from €6b to do a deal with Labour. The negotiations are going to be fraught after this announcement.

‘one Green source said “We said what we said but we didn’t mean to be taken too literally.”‘

Just about sums up their time in power – a joke.

I wouldn’t be too confident that FF will be wiped out. I know many dyed-in-the-wool FFers who simply could not countenence voting for someone else.

Based on polls over the last year, the FF core vote could be 20-25% of the electorate or even more. Some on the looney nationalist wing of the party will vote for SF if there is a credible candidate in their constituancy. Others will vote for likeable independents, but it all depends on how many of them stay at home.

It has become clear over the last year that FF voters will not start voting FG in any great numbers and outside Dublin, few will vote Labour.

@Frank G.
It won’t be Tallaght 2 becuase FF does not do responsibility for tough measure without power even if it were in the national interest.

If the numbers add up, the rump of FF that survives the election will offer FG the deal of the century to stay in power. After nearly 1/4 of a century in power, they can’t contemplate opposition where SF might make them look irrelevant.

To answer your question, I am sure there is no Plan B being devised in Brussels or Frankfurt. They are now focused on the debate between the hawks and doves in the ECB and about long-term Euro planning.

I am fairly certain that if FG have the upper hand in the election there will be no renegotiation. If Lab do better than expected and have the Finance portfolio after the election, it could be a different story.

If there is renegotiation, it is important that it is not done in a beligerent way. One aspect that has been ignored by our current government is the German electorate. If a new government tries to renegotiate, it must carry out a major PR exercise with the German tax-payer (along the lines of your letter from Dublin or Eichengreen’s column in Handelsblatt).

From a political point of view it is currently too easy for the German government to pull out of negotiation or, indeed, the Euro itelf and blame the whole thing on reckless foreigners. We need to make this course of action as difficult as possible for Merkel & Co.

But Labour 48 + Sinn Fein 24 + 10 “left wing candidates” out of the 15 Independents = 82; maybe (reversing the usual pattern) an FFer or two could be persuaded to support a left-wing government.

So far, SF (whom I dislike intensely, by the way) has the most coherent alternative to the present government’s policies; FG is incoherent and Labour is silent. SF has also added a very convincing speaker to its Dáil ranks.

With union support, the left and SF could, I think, strengthen their position even more before an election. The very fact that a left/SF coalition is (on seat numbers and on policy, even on the minimal basis of an alternative to cuts) a possibility might, I suspect, make more people vote for it.

There are too many different types of right wing to present a credible argument, and neither FF nor FG has much credibility.

@Bazza.
FG know that the IMF/EU deal negotiated by FF/GP is unsustainable.
To be charitable, FF/GP being a bunch of economic ignoramuses probably don’t understand it and think just because someone told them that it is the best deal currently available, that they have done a great job for the country.

The deal will be negotiated within one year because we simply cant afford it.

The bond situation meant that the argument against default-that any default on bank bonds would stop lenders providing money to the sovereign was dead in the water.

I also think the argument against an election now is dead. FF got nothing out of the deal and they have no popular support- nobody is going to vote for that deal if given a choice. Finland has a parliamentary vote on its share of the bailout- why shouldn’t Ireland ?

I must say that I am getting a good laugh at a lot of the posts on this thread. Economics meets the real world of democracy, public opinion, interests…..At least Brian Lucey on another thread seemed to realise that it was now over to the political scientists! Thanks for brightening up my snowbound monotony!

No property tax might be cute hoor politics of the type Noonan espoused during his disasterous year as leader but his low rate CGT on the site value of primary residences is a nonsense. At the lowest level, here we go again with another transaction tax. I though Noonan has done well recently, but this is a piece of idiocy.

Every developed country has a form of property tax – surely we can just pick a simple easily administered one and run with it.

That proposal is aimed at the Dublin voter. I expect it to be forgotten after the budget. FG don’t need to make promises now. They have way more policies out there compared to previous two elections. Their main job will be keeping Enda off the airwaves and keeping their feet out of their collective mouths.

BTW, there is no way FF will go into Government with FG. Many of their supporters would have preferred to see them go into opposition in 2007. They were in power long enough at that stage. If FF did go in with FG they may as well disband the FF party.

Well, more than we might want in deed. The OECD talks collapsed. This is not good, not good at all. It has the potential to refuel old conflicts, and the ideological east-west conflict is anything but from over as this conference failure indicates.

@Tull
I reckon 20 independents, maybe 1-2 greens and add the remaining in proportion to the other 4 parties. My main points are that FF will not be wiped out, FG will not even approch a majority and Labour will fail to make the big breakthrough into the largest party.

@Brian Woods
Agree that left vs right will not become the dominant divide in Irish politics, but I do not think the status quo of right/centre-right will persist either.

I actually think that a majority of Irish people are left leaning on economic issues, if not moral issues. Most certainly believe in social justice, equality of opportunity and progressive taxation. However, the influence of the church on moral issues in the past combined with the virulance of the trades union movement has, until now, pushed most people to the centre right.

If Labour ever manages reform of the trades union mvmt à la NuLab in the UK, it could move the electorate leftwards. In that case, the main faultlines will be urban/rural and secular/religious. In fact, I can see a split in FG along these lines already.

@Maurice O’Leary
“Every developed country has a form of property tax – surely we can just pick a simple easily administered one and run with it.”
Every developed country also has a rich tax-evading elite, systemic poverty groups, drugs and prostitution. Surely we should stop trying to get rid of those too?

Correlation does not imply causality.

Personally, I prefer taxes on economic activity, not taxes on shelter…

M O’L
If all those other economies ran under a bus would you too? It’s as strawman as you jibe about an undeveloped economy. It is no great sign of sophistication to introduce a window tax.

It is a specious argument to make that property tax is the reason they are the way they are. Once a tax is introduced, it doesn’t go away. Those other countries are trapped by their property taxes. They can’t afford not to have them whether they are a good economic idea or not.

I think they are a bad idea. What are we going to do with someone unemployed? Give them the money for the tax or not collect it? Or make them starve to save their houses?

So the tax will come, for those that can afford it, out of income or savings. We already tax income and savings. We already give tax breaks to mortgage debt. If income and savings taxes are not high enough, then raise them, don’t hide behind indirect taxation. If tax breaks on mortgage interest are too high, then lower them.

Like taxes on the super rich, you are tilting at a target that doesn’t exist. There is no store of wealth in the country that couldn’t already be targeted by existing taxes or removing tax reliefs.

There has been a property bubble of galactic proportions.
We have had no proper property taxes since 1979 approx.

Other countries solve the problems of poor people and property taxes.
They range from the socialist Scandinavians to the libertarian Americans.
I think you can find a model out there that corresponds with even your position in the political economic spectrum.

Since this is a political thread I’d be interested to hear any opinions people may have on whether a list system would help wean the Irish electorate off clientilist politics and make for better nationally focused TDs? Sounds like a good idea to me – but I don’t hear any political parties putting it forward. Dan O’Brien mentioned it in his Ireland, Europe and the World book… I’d love to see a decent debate on this! I think a lot of our local gombeen politics can be attributed to multi-seat PR constituencies where TDs and Ministers have to constantly focus on local issues – it can’t all be down to our pysche – it’s the system too!

Agreed. It will be a national scandal (or another national scandal) if the next gov fails to deliver political reform that protects the general public from the localism and short-termism that dominates Irish politics.

I like the German system -I think its AV for 70% of seats and List ystem for the rest.

Proposals for the senate are also very important; this house needs to act as a counter balance to the whip system in the lower house.

I’d also propose a citizens assembly drawn at random (for set periods e.g 3/6 months) to sit permanently alongside the other two house – all important legislation could be voted on here – if more than 65% vote for the proposals it gets passed, if its between 30 and 65% the government can have a referendum on it; at less than 30% support its back to the drawing board.

@ Paul hunt
“but its overall support is being fuelled by a false perception that the free market, liberal democracy model has failed and that some form of state capitalism is the way to go.”
Paul what America and Europe have had for the last (at least 30 years) has been a form of state sponsored corporate capitalism.
The easiest way to spot this is to look at the falling proportion of tax contributed by Corpo taxes.
The only capitalism in our society is within the self employed and very small business (less than 10 employees) sectors. Everyone else are getting tax breaks grants etc.
@ Veronica
One of the weird things about Fina fail is that although their governments and sponsors are right wing most of their voters are too the left. If people who have always voted Fina fail are going to jump ship i think a lot will vote for lab and SF. I am still not sure despite what they say in the poles that they will abandon FF however. I think FF will hold at least 40 seats for reasons of cognitive dissonance.

@M O’L
“Other countries solve the problems of poor people and property taxes.”
The two are not related. In the US you get ejected from your property if you cannot pay. I find the Boston model distateful.

As for Sweden, I prefer to listen to what the Swedes say, not what others cherrypick about them:http://www.sweden.gov.se/sb/d/9698/a/138026
“The main finding is that recurring taxes on immobile property, and to a lesser degree, consumption taxes, appear to have the least impact on growth, while corporate taxes, followed by income taxes, are found to be the most harmful. However, practical tax reform also requires a balance between the aims of efficiency, equity, simplicity and revenue raising. And one must also consider whether a tax is legitimate or not. In the latter respect, the property tax faces special problems. ”

With a property tax, as opposed to a return to a rates based system or a local income tax, you have to convince that it is legitimate to tax already paid for assets (paid for with taxable income). You have to justify why, in taxing the asset value or the site value, you don’t allow depreciation or improvements to be offet against it. Finally, you will have to convince on any exemption or reduction scheme you offer. If a pensioner is sitting in a mansion and you expect them to pay or sell, why should it be different for any other family on welfare? If it is not any different, why should a working family bear the cost?

“I think you can find a model out there that corresponds with even your position in the political economic spectrum.”
You have no idea what my position is. I’ll give you a hint, not everyone is either fish or fowl…

You know the way in the US political views are can broadly be described on two dimensions – authoritarian versus libertarian, and left versus right. And the difficulty the two party system has in representing the four major viewpoints that result from this.

I think there is going to be a very similar problem in the upcoming Irish election. The two big dimensions on which political views vary will be left versus right, and between a very blunt prioritisation of the national interest and a continuation of lying back and thinking of Europe and creditors.

Sinn Fein has itself positioned clearly on the left, and in the blunt national interest. Fianna Fail has positioned itself clearly on the right and supine on creditors and Europe.

Labour has positioned itself on the left, and sitting on the fence with regard to the national interest, creditors and Europe. Fine Gael seems to be trying to sit on the fence on both dimensions. It’ may be a good strategy for vote maximisation, because there’s no one credible to the right or centre that’s more assertive on the national interest.

But it does mean that there is no party representing the fury at betrayal by the government and the EU that I think most of the country feels, while remaining true to the centre and centre-right perspective that has traditionally come naturally to a majority of voters.

@BeeCee Tee:
“The two big dimensions on which political views vary will be left versus right, and between a very blunt prioritisation of the national interest and a continuation of lying back and thinking of Europe and creditors.”

I don’t understand “left” and “right”. Which, if any, of these views represents those who would like an axe taken to the rent-seekers and licensed occupations, including teachers and management consultants?

@Brian G, unfortunately wishing to protect rent seekers seems to be universal. The parties just differ a little on who they wish to protect, and how thoroughly they wish to do so. So it’s unlikely to form a political fault line during the election.

Oh Ernie, you are such a card. Some of us are trying to describe the way things are with a view to identifying what might be possible to enhance general prosperity and well-being – or, in the current circumstances, what will do least damage. You, and those who share your views, seem to be able to skip merrily to what you think ought to be.

I accept what I am describing may upset your delicate sensibilities, but do you really have to pin on me the label of one of its least desirable features?

Thank you. You may say that, but I couldn’t possibly comment. In fact, I welcome the apparent realignment of politics that is taking place in that it may resemble that in most mature developed democracies. A mature, open, informed debate is long overdue on the role of the state, the responsibilities of citizens, individually and collectively, and on how capitalism may be managed to generate economically and socially useful outcomes.

It is, perhaps, ironic, but, to me, not surprising, that the leader of the centre-right governing party in Germany is taking the lead in seeking to impose some discipline on the behaviour of modern financial capitalism in the interests of all the EU’s citizens.

It is in all our interests to be supportive of this effort – and any interim steps that may be taken legally to reduce the burden of debt on citizens. Any talk of default runs the risk of scuppering the entire exercise. It is both irresponsible and self-defeating.

So I’ll repeat my view that default is not only desirable, but will turn out to be necessary on a much larger scale if we do not get it out of the way quickly. Having it hanging over us will act as a drag on the economy until we bite the bullet.

The number one thing any Irish government should be concerned with is stabilising the mess we are in with a ratio of acknowledged outstanding debt to GNP of no more than 100% as quickly as possible..

The German chancellor is engaged in a hypocritical game of “Lord make me virtuous but not yet”. She supports default so long as it does not happen in her current term of office, which wouldn’t suit her.

A combination of misgovernance, greed and stupidity has placed us at the mercy of the interests of the big EU powers – with Germany being the biggest. In terms of the fiscal adjustment parameters and of the on-going resolution of the Irish domestic banking sector the Troika is now in charge and there is nothing Ireland can do unilaterally – other than do something that could bring the whole house down.

Insofar as they are aware, I am sure most German voters have no desire to crucify Ireland, but if they look, they see the same government in place and many of the same leading players who are culpable in creating the mess in the first place. They may also be aware of – or may have had their attention drawn to – the multitude of possible internal reforms in the domestic economy that would reduce deadweight costs and boost growth and employment and note that no serious effort is being made to address these.

No point in waiting for an Merkel Ex Machina who may never appear to save us, when we can save ourselves.

If the ECB’s solution to the insolvency of the European banking system is to monetise bad debts, there’s no good reason why we should cooperate in doing it over a period of several years when all it would cost them to do it now instead is embarrassment.

@Paul, I would simply say that we should be prepared to bring the house down if that’s what’s needed to keep our debt to GNP ratio to 100%. I would be very surprised if it came to that, because the EU always seems to be able to do just enough to stave off collapse. If we are sufficiently resolute, it will find another way out.

Political posturing will be the order of the day every day until election day. It does not matter what the cute hoors promise it is unlikely they will have the capability to deliver. My sympathies will lie with the coalition that takes over in the weeks following election. Stuck in the midst of groups clamoring to maintain their rung on the gov’t benefits ladder and unable to produce a benefit for any group. Even worse having to implement widespread cuts to benefits while raising taxes. FF deserve to be re-elected so as they can get the punishment they so richly deserve. I see SF benefiting from the backlash of “a pox on all the established parties” as FF and FG are peas in a pod with Greens/Labour simply there to maintain the status quo ante. My prediction is for an unstable coalition which will fall within months followed by a period of political instability lasting for years. Not to worry though as the EU will be the stabilizer.

This suggests to me that Germany have at least considered/tested the option and keep it in the armoury. I wonder if they would invite one or two other countries to step up to the Bundesleague premier division of currencies with them when they implement the Euromark. A two-tier Europe…. there’s a thing.

I’d add that I think that Ministers should only be chosen from the list…how can a TD serve their constituencies and an office of state at the same time?
This would have the added benifit of reducing the influnce of localism on decision making.

Also TDs on the list could not recive personal donations of any amount as tehy don’t have a personal campaign to fight, reducing the link between cash donations and high office.

But how are we going to get this – Turkeys and Xmas.

On a seperate point we should have a trent on the excellant artical by Paul Gillespie in todays IT.

@Paul Hunt:
“A mature, open, informed debate is long overdue on the role of the state, the responsibilities of citizens, individually and collectively, and on how capitalism may be managed to generate economically and socially useful outcomes.”

Sure, but I suspect what we’ll get is a coalition of folk who want someone else to pay.